What type of loan is best?

Recently purchased a home with a 30 year fixed at 6.0% and looking to refinance to take advantage of lower rates. Our goal in 5 years is to buy another home and either keep our current property as a rental or buy an investment property. What type of loan would you recommend? A 30-year, a 5/1 ARM or 7/1 ARM? Current pricing for each is 5.375%, 4.25% and 4.625% respectively.

I would stick with a 30 year fixed, especially since you want to move in 5 years and keep it as a rental property.

If you choose an adjustable rate loan, unless you have a predetermined time where you are going to sell the property, if you move, you're going to have to refinance that loan and it will no longer be an "owner occupied" loan. This means you will be subject to higher rates as a non-owner occ loan, along with lower loan to value rules and higher reserve requirements.

By sticking with a 30 year loan, you always know exactly what your payment is going to be and don't have the concern of having to refinance with terms you may not be able to meet down the road, along with having to deal with higher interest rates. They WILL be going back up in the next five years....you can count on that.

Mortgage refinance home loans Franklin TN Myth 2